Various Entrepreneurial Strategies for Business Success | Nokia Case Study
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Entrepreneurship refers to activities undertaken while planning, organising, setting up and running one's own business organisation. Success of each venture is dependant upon their business strategy which is required to be modified as per the changes in dynamic business environment (Feldman, 2014). The following report is based on case study of Nokia, a Finland-based corporation which exited the Indian market in 2007 and made a comeback almost a decade later. It covers various resources, its core capabilities and several models which analyse its internal and external strengths and competencies that enhances scope of entrepreneurial-strategy making.
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Types of Business Organisations
Various companies operate at different levels and satisfy different agendas. However, it is crucial to determine the types of organisations. These are mentioned below:
- Micro Organisations:These organisations operate at a very low level and usually incorporate less than 10 employees.
- Small Organisations:However bigger than micro companies, these organisations have a range of employees between 10-50 individuals. These firms implement lenient strategies to effectively survive the market forces and fulfil their standard business operations (Anderson and et. al., 2015).
- Medium Organisations:These incorporate employee range of between 1-250 people and work on a medium level where their business strategies are aimed at enhancement of profit as well as development of market share.
- Large Organisations:These firms operate at a very large levels and mostly based in multiple locations. Such companies have unlimited turnover and more than 250 employees. Nokia is one such companies that have roots in various prominent developing as well as developed countries. Approaches and strategies used by large organisations differ severely from SME's and they exist to earn profit. Along with this, their approaches and strategies aim at withstanding competition and ensuring fulfilment of interest of each stakeholder while aiming to hold a prominent worldwide status.
Identification And Critical Evaluation of Models
Strategic capability refers to ability of a business organisation to effectively sustain market and its heavy competition while applying various competent strategies and resources towards achieving utmost success within the market. Nokia has been quite a prominent name in the global market and it is imperative that resources and competencies are determined to help perform an analysis on its capabilities by implementing various models.
These are the tools, methods, personnels and techniques which are required by companies to run their operations smoothly to achieve their strategic and organisational objectives. There are two types of resources which are mentioned as under:
- Tangible Resources:These items within a company are physical in nature, i.e., they could be felt and physically be present with the company. Assets under this include equipments, machineries, cash, buildings and so forth.
- Intangible Resources:These resources lack physical aspects and substance. Evaluation of such assets is very complex for companies. Such aspects refer to copyrights, patents, goodwill, knowledge, etc.
Resources have various categories too which are mentioned below:
- Physical Resources:These assets have physical properties and are useful for a firm like Nokia to carry out its manufacturing operations. The manufacturing equipments in its facilities and machineries equipped to develop its product could be vital examples of physical resources (Perry, Chandler and Markova, 2012).
- Financial Resources:These are financial support which is needed by companies to buy effective tools and techniques and invest in various market opportunities which would help them grow in the market. Nokia requires these assets to carry out its day to day activities and fulfilling business needs effectively.
- Intellectual Capital:These refer to a company's intangible value which covers each aspect of organisation. One of its main components is intellectual property. These refer to the copyrights, patents and trademarks which company has to protect its effective work and ensure a better market position and strategies. For instance, a quite recent patent war between Nokia and Apple were results of violation of some patents like Global Motion, Diversity Antenna, VCO turning, etc. which ultimately resulted in Apple being sued (These Nokia Patents are why Apple is getting sued, 2019). Intellectual capital is essential for protection of company and a smooth running of organisational operations.
- Human Resources:Within companies, there are various individuals who support the organisation and are responsible to take the forward. These are Human resources of an organisation who apply their skills and competence to aid companies in achieving their objectives. Nokia, as per recent statistics, has more than 100,000 employees.
Illustration 1: Number of Nokia employees from 2005 to 2017 (in 1,000s)
(Source: Number of Nokia employees from 2005 to 2017, 2019)
These are the concepts which which consists of amalgamation of various resources and channelising their strategies towards attaining a better market position. The various core competencies for Nokia are:
- Technical Superiority
- Organisational Knowledge
- Market Analysis
- Strategy Building and Implementation.
Nokia was a market leader in cellphone market for over 14 years when suddenly, other companies like Samsung took over the market in ways which caused the company to exit the Indian Market in 2007 (Nokia in India: Staging a Comeback, 2017). There are various reasons why it lost its market, some of which are mentioned below:
While that era was started to incline towards touch screen phones and android, it required the company to innovate and bring better design to serve better in the market. Nokia failed to innovate as per market requirements and thus, was caused to exit the market.
Nokia failed to anticipate future requirements and got stuck in its Symbian Handsets while companies like Apple and Samsung modified themselves in the touchscreen market. While other companies underwent tremendous change in future, Nokia couldn't structure itself as per the market requirements (Three Reasons why Nokia Failed, 2014).
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However, in 2017, it made a comeback in the market and it is essential for the firm to look at its internal strengths and weaknesses effectively. To achieve this, the company would be adopting SWOT analysis which could aid the company appropriately in analysing its internal strengths and weaknesses to enhance opportunities and limit threats. The SWOT analysis is mentioned below:
- Experience:Nokia has more than 140 history in the market. This experience is quite a strength for the company to effectively perform various marketing function and retain its customer base in the country.
- Strong Selling and Distribution Method:With establishment in every major country, Nokia perhaps has the strongest distribution and selling network with ample supplier network through the ages.
- Poor after sales Services:There have been instances where Nokia after-sales services has been criticized which could affect its sales in the country due to negative publicity.
- High Price:Most handsets by Nokia are very high priced which refrains low and middle class people to purchase the same.
- New Markets: With such advanced technology rising and being accessed, Nokia could penetrate into new markets and enhance the scope of increasing its sales.
- 5G Technology:There are quite new modifications in cellular technology quite frequently which opens the spectrum for improvement for Nokia in Indian Market and establish itself again as a market leader.
- Competition:Many prominent and large-scale organisations like Samsung, Apple and OnePlus are already present in the market and have a large market share in the country which might increase the threat on Nokia for its re-establishment. In addition, many Chinese companies too are having strong market in India due to advanced technology and cheap price along with more durability.
- Diversification:Each smartphone company available in the market have diversified models and better range available for customers to choose from. Thus, such high investment of time, effort and money in ensuring diversification could be a threat for Nokia (SWOT Analysis of Nokia,2019).
While establishing itself again in a country requires Nokia to analyse its external environment too in order to develop appropriate and contributing strategies to enhance its profitability in India. For this, PESTLE analysis is used which determines external pointers for which influences working of a company. This analysis is mentioned below:
- Political:India is quite developed and politically stable country. Its democratic nature reflects well in the policies set out for businesses in the country. With such effective political environment, the policies of the country encourages Foreign Direct Investment. This could be an opportunity for Nokia to invest and set up its market again in Nokia. However, the country experiences unusual and untimely political unrest which might be a threat to Nokia in smooth running of their business operations (PESTLE analysis of India,2017).
- Economical:India is one of the most populated countries of the world with more than 1.3 billion population. There is a substantial growth in India's GDP which was recorded at almost 7.2% in 2018-19 (Agri, manufacturing sectors to push GDP growth to 7.2% in 2018-19: CSO, 2019). This trend is likely to be increased in future which provides ample opportunities for Nokia to modify its pricing which would enhance its profitability.
- Social:The consumer market of India is quite vast and various range of buyers having different technological needs are present in the country which is effective for the company. In addition to this, people in the country favour every new and unique smartphone in the country and very much technologically inclined. In addition, cultural integrity is the strength of this country which could allow Nokia to effectively conduct regional marketing campaigns to attract more customers. This is because, people refer personalised marketing strategies being adopted by companies which would allow Nokia to connect better with its lost customer base. Along with the personalised marketing strategies adopting of current and futuristic trends as per their needs such as operating systems controlled by Artificial Intelligence would be an opportunity for the company.
- Technological:India is a technologically advanced country where attempts have been made to digitalise each and every aspect of business and social activities. The government and various local companies have effectively made digital technologies available even in remote areas of the nation. This factor would allow Nokia to enhance its customer base and establish its production as well as distribution network deeper in the country. Moreover, with enhanced IT infrastructure and highly skilled workforce would give better opportunities to Nokia to develop its software, applications, etc.
- Legal:This aspect of India is quite favourable in case foreign companies want to invest their money in the country. Nokia has been an effective company and a household name in the country. Currently, the corporate tax rate is at 30% which is likely to reduce within the next 4-5 years to 25% (India's legal and regulatory framework, 2019). In addition to this, the Goods and Services Tax in India has effectively reduced the complexity of business operations which would be a very prominent opportunity for Nokia.
- Environmental:Each company set up in India is required to effectively constrain themselves from causing any harm to the environment and the nation has set up various legislations that are required to be followed by these companies. One such act is The Environment Protection Act, (1986) which could cause a threat to the company in producing in ways which does not cause pollution up to a certain level (Impact of Environmental Law on Corporate Governance, 2019).
Porter's Five Forces Model
With effective internal and external environment analysis, Nokia must effectively determine its industrial attractiveness which would set a base for its strategies in India. For this purpose, Porter's Five Force Analysis could serve as the most apt strategy to analyse the competition and competencies for Nokia to develop effective strategies. This analysis is mentioned below:
- Suppliers' Bargaining Power:Nokia has a very vast supplier market in the country which supplies the firm with various effective materials for production. The firm depends completely on these entities to supply them top quality products to help them with manufacturing. Microsoft is the supplier for Nokia which enhances bargaining power of the former. With hardware suppliers the company could negotiate a better deal which reduces suppliers' bargaining power and thus, makes this threat moderate for Nokia (A "Porter's Five Forces" Analysis of Nokia, 2019).
- Customers' Bargaining Power:With lots of existing companies and a customer-centric market environment, bargaining power of customers is constantly increasing as they could switch to other cellular companies which have more or less similar features and thus, this makes their bargaining power quite high.
- Threat of Substitutes:Smartphones in current scenario are used for multi-purposes. These purposes include radio, camera, music, films, banking, etc. All digital functions are now possible with the help of a smartphone which drastically reduces this aspect for Nokia (Porter's Five Forces Analysis of Nokia,2019). This is because substitutes would be to purchase all of these products separately which is quite inconvenient for the buyers and hence, this threat is low.
- Threat of New Entrants:With current scenario of telecommunication market, it requires a heavy investment and innovation to produce handsets which could compete with what is already present in the market. Moreover, there are various companies which have a vast loyal customer base and consistent scope for success. Such barriers restrict new firms to enter and effect the industry like that of existing companies like Nokia. In addition, Nokia had a crucial 8% share in second quarter of 2018 in feature phones in India and thus, this threat is really low for the company (CP Q2 2018 DATA: IN INDIA, NOKIA NO. 3 IN FEATURE PHONES, BUT STILL NOT IN TOP 5 IN SMARTPHONES, 2019).
- Threat of Existing Competition:Various telecommunication companies like Apple, Samsung, Xiaomi, One Plus, Etc. have captured Indian markets effectively and are very popular among the country. The reason for this is their design, product quality and service features which are technologically advanced and user friendly. Nokia, after its re-establishment in India recently is facing heavy competition with these companies. This threat of rivalry is quite high for Nokia.
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Range of Entrepreneurial And Intrapreneurial Strategies
It is imperative for Nokia to determine various strategies to re-establish itself in Indian as well as in global markets. This is because, such strategies would allow the firm to sustain heavy competition and expand its customer base in the country. A range of Entrepreneurial and Intrapreneurial strategies that could be applied by Nokia are evaluated below:
- Effective Market Analysis:One such entrepreneurial strategy for Nokia is to effectively analyse the market as per the trends, values and advancements which could help drive the company forward. Nokia could use various tactics for market analysis which is effective and quite essential for the firm to regain its position in the market.
- Customer Orientation:Another strategy which could effectively be used by Nokia is analysing customer trends. Each customer is important and it is crucial to determine their trends and their preferences which would allow the company to manufacture products as per customers' need.
- Innovation:With dynamic market needs, it is crucial for Nokia to innovate its products and processes in relation to support the changing environment. The firm must ensure effective use of technology and different methods which could help its handset stand ahead in the market and beat competition.
- Business Objectives:For any company, it is recommended that it set up various objectives which could serve as targets for the firm to achieve. Nokia could use this strategy to ensure short as well as long-term success in the market.
While market analysis would provide the company with information about companies and technologies, customer analysis would accurately help in determining preferences of buyers and thus, analysis of customer trend is a viable entrepreneurial strategy for Nokia. On the other hand, innovation as well as objectives are crucial for Nokia to adopt in respect of creating a market place where it couldn't be out of customer trend for long term.
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Organisation Strategic Situation And Objectives
The company is currently struggling to make its place in the Indian market with such advanced competition and vast range of diversified products (Eggers, Hansen and Davis, 2012). For this, the firm must effectively set out few objectives which could be helpful in its long-term success.
- To analyse and develop at least 2 new range of smartphones within the next one year.
- To enhance its customer base by 4% within the next 6 months.
The firm must adopt various ways and strategies which would be appropriate in achieving in these objectives set above. The firm, in order to ensure a long run must effectively implement various strategies which would set a competent image of this company in front of its competition. Various strategies are mentioned below:
- Nokia must adopt diversification as a long term strategy to develop handsets which would serve needs of various customers effectively.
- The company must also adopt penetration pricing strategy in order to provide top quality handsets to customers of less income group. The utmost advantage of the same would be that majority of population in India belong to middle and lower class which could help in enhancing its customer base.
Thus, it is concluded that entrepreneurial strategy is quite important and imperative for the company. SWOT analysis effectively allows the company to judge its internal competence, skills and weaknesses. PESTLE analysis helps in determining and analysing external environment. Lastly, PORTER's five forces helps in determining industrial attractiveness. All these models are imperative developing implementation strategies to help companies in sustaining in the market and develop appropriate customer base.
Books and Journals
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- Anderson, B.S., and et. al., 2015. Reconceptualizing entrepreneurial orientation. Strategic management journal. 36(10). pp.1579-1596.
- Eggers, F., Hansen, D. J. and Davis, A.E., 2012. Examining the relationship between customer and entrepreneurial orientation on nascent firms’ marketing strategy. International Entrepreneurship and Management Journal. 8(2). pp.203-222.
- Feldman, M. P., 2014. The character of innovative places: entrepreneurial strategy, economic development, and prosperity. Small Business Economics. 43(1). pp.9-20.
- Perry, J.T ., Chandler, G. N. and Markova, G., 2012. Entrepreneurial effectuation: a review and suggestions for future research. Entrepreneurship Theory and Practice. 36(4). pp.837-861.